Siltronic AG — Investor Presentation 2017

Apr 20, 2017

Siltronic – a leading producer of silicon wafers

Roadshow Presentation April/May, 2017

Increasing demand for electronic devices and new applications drive semiconductor growth, which in turn fuels silicon demand.

Electronics value chain 2016

Source: Electronics (IC Insights), Semiconductors (WSTS, only silicon-based), Silicon wafers (SEMI SMG), electronic applications (WACKER estimate)

Siltronic is a strong wafer supplier with leading-edge technology

Top 5 wafer producers serve more than 90% of market across all diameters

Sources: Companies' revenue reports 2016, converted to USD mn

Siltronic is Focused on Growing 300 mm and Attractive 200 mm Business

Development of Total Wafer Demand per Diameter, in million 300mm equivalents per month

Source: SEMI up to Feb 2017, Siltronic estimates

300mm demand is expected above industry capacity, after almost a decade of over-supply

300mm effective capacity vs. demand, kpcs per month

Comments

• Extension not considered at current price levels
• ~30% to 35% overall empty shell capacity estimated to be available
• Would allow for costefficient brownfield extension according to demand growth without need of creating overcapacity
• Takes around 12-18 months to bring brownfield capacity online

Sources: SEMI, IHS, Siltronic

Market highlights

Silicon wafer demand

• Wafer demand stays strong, exceeding supply
• Siltronic's 300mm and 200mm production fully utilized since Q3/2016
• Demand in SD wafers (<200mm) picked up; high utilization by now
• Customers want to negotiate expiring contracts at earlier stages and ask for longer contract terms

Price increases

• Substantial increase in wafer prices for 300mm in Q1
• 200mm wafer prices also increased but not in the same magnitude as for 300mm
• Siltronic negotiated additional price increases for Q2
• Continuing positive price trend expected for Q3

Customer prepayments

• Customers prepayments in 2017 of around USD 20m negotiated
• Prepayments partly received in Q1; further payments will be received during 2017
• Prepayments will be invested in production equipment for leading-edge products
• This will not lead to additional capacities but improve Siltronic's product mix

Silicon area demand continues to grow

Silicon wafer demand, in bn in²

Source: SEMI (Silicon Area until 2016), IHS Markit Technology (Semiconductor Silicon Demand Forecast Tool, Q1'17 Update, Estimate 2017)

IHS Markit forecasts silicon wafer demand growth of 4.9% in 2017

Source: IHS Markit (Semiconductor Silicon Demand Forecast Tool Q1 2017 Update)

International manufacturing network supports market leadership and business focus

Customer base well diversified across all major semiconductor silicon wafer consumers

Siltronic is a supplier to all top 20 silicon wafer consumers

Source: Siltronic

Financials improved strongly over the last years

Adjusted1 financial figures (EUR mn)	2012	2013	2014	2015	2016
Sales	1030.0	875.5	853.4	931.3	933.4
EBIT	(75.5)	(87.3)	(31.6)	2.7	27.0
EBIT margin in %	(7.3)	(10.0)	(3.7)	0.3	2.9
EBITDA	122.5	112.6	117.7	124.0	146.0
EBITDA margin in %	11.9	12.9	13.8	13.3	15.6
CapEx	144.3	39.7	40.7	75.0	88.8
Free cash flow	(134.4)	64.7	86.3	37.4	19.0

¹figures 2012-2014 adjusted for consolidation effects resulting from acquisition of SSW and restructuring

Successful cost reduction programs continue

Cost savings, in EUR mn¹

Additional savings levers:

• Investing in automation in Germany
• Investing in new pullers to improve yields and capabilities
• Poly cost optimization ongoing
• Further productivity increases through various initiatives

¹ Based on prior year cost basis to current year volumes and adjustments to certain current year costs to reflect prior year contractual and economic parameters (e.g. prior year unit labor cost).

CapEx: spending mostly for capability and cost reductions

Adjusted¹ CapEx and D&A, in EUR mn CapEx 2015 and 2016

• New crystal pulling hall in Freiberg
• Exhange of old crystal pullers vs. state-of-the-art equipment
• Automation projects in Germany

2017 focus on

• Capability improvement
• New design rules
• New generation crystal pullers
• Cost reduction (e.g. further automation)
• Debottlenecking

¹ adjustments are based on the assumption that SSW would have been consolidated prior to January 1, 2014. Initial consolidation of SSW was made as of January 24, 2014. The adjustments are not in compliance with IFRS.

Siltronic Outlook 2017 (Update as of April 27, 2017)

EBITDA margin	at least 23%: update
ROCE	substantially higher than in 2016, considerably higher than WACC: update
Free Cash Flow	clearly positive; by far above 2016
Sales	at least EUR 1.06bn: update
R&D	unchanged at approx. 7% of sales
Cost Position	potential savings of around EUR 15m to EUR 20m: update
Hedging Expenses	substantially lower around EUR 10m (at EUR/USD = 1.05; EUR/JPY = 120)
Depreciation	on the level of 2016
Tax rate	20% or slightly below: update
Financial Result	roughly EUR 10mn interest expense
Earnings per Share	significantly higher than in 2016
CapEx	around EUR 100m, partly financed by USD 20m customer prepayments

Appendix

Continuous improvement of key ingot and wafer properties to meet customers' requirements

Financial Year 2016: Highlights

Sales	Sales of EUR 933.4mn (2015: EUR 931.3mn)
EBITDA	EUR 146.0mn (2015: EUR 124.0mn), Without negative FX effects* EBITDA would have been EUR 166.9mn
Margin	EBITDA margin 15.6% (2015: 13.3%) Without negative FX effects* EBITDA margin would have been 17.9%
EBIT	positive at EUR 27.0mn (2015: EUR 2.7mn)
Cost Savings	around EUR 30mn
Investments**	EUR 88.8mn (2015: EUR 75.0mn), mainly in enhanced capabilities
Free Cash Flow	EUR 19.0mn (2015: EUR 37.4mn), despite EUR 11.1mn one-time payment to pension fund and EUR 20.5mn repayment of customer prepayments
Net Cash	EUR 175.0mn (2015: EUR 155.9mn)

*other operating income and expenses influenced by FX effects, mainly due to hedging . In 2016, FX effects added up to expenses of EUR 20.9mn. ** without investment in financial assets

Highlights Q1/2017: Financials

Sales of EUR 258.0m (Q4/2016: EUR 246.3m) +4.8% q-o-q
EUR 53.0mn (Q4/2016: EUR 50.5m) +5.0% q-o-q
EBITDA margin of 20.5% (Q4/2016: 20.5%) stable despite the usual higher cost base in Q1 compared to Q4
EUR 23.4m (Q4/2016: EUR 20.0m) +17.0% q-o-q
EUR 19.3m (Q4/2016: EUR 23.9m)
EUR 31.3m (Q4/2016: EUR 10.0m)
EUR 209.1m (December 31, 2016: EUR 175.0m)

Q1 sales development driven by increased prices, higher wafer volumes and some tailwind from USD

Positive development of EBITDA and EBITDA margin due to higher ASP, cost reductions and decreasing hedging expenses

Comments

• Positive
• Higher ASP y-o-y and q-o-q
• Successful cost reduction program continued
• Lower hedging expenses* y-o-y:
  • Q1/2017: EUR 4.5m
  • Q4/2016: EUR 1.5m
  • Q1/2016: EUR 9.7m
• Positive effects of strong USD (compared to Q1 2016) on sales and gross profit outweigh negative effects on other operating income and expense

*Other operating income and expenses influenced by FX effects, mainly due to hedging

Positive development of net result due to price increases, higher wafer volumes and lower costs per wafer area

Comments

• Net profit of EUR 17.0m in Q1/2017
• Driven by price increases, higher wafer volumes and lower manufacturing costs per wafer area
• EUR 4.0m effective taxes
• Potential future tax advantages based on tax losses carried forward not capitalized (accounting policies)

Equity ratio of 43.3% Net financial assets of EUR 209m

Balance sheet, in EUR million

Assets	Mar 31, 2017	Dec 31, 2016	Comments Mar 31, 2017	Equity and liabilities	Mar 31, 2017	Dec 31, 2016	Comments Mar 31, 2017
Non-current	547.0	554.1		Equity	475.1	425.3
PP&E	514.6	519.8		Siltronic	481.4	431.9
Other fixed	32.4	34.3	25 intangibles (related to SSW)	Other shareholders	-6.3	-6.6	Samsung's 22% in SSW
Current	550.2	502.7		Liabilities	622.1	631.5
Inventories	144.3	140.9		Pension provision	371.4	395.1	Germany and US
Trade receivables	128.4	118.2		Other provisions	52.0	51.1	40 personnel related (e.g. early retirement)
Other current	26.8	28.2	2 hedging	Financial debt	41.6	40.4	Samsung
				Trade liabilities	82.3	81.6
Cash and fixed term deposits	250.7	215.4		Other	74.8	63.3	27 prepayments 33 employee-related 7 hedging
Total	1,097.2	1,056.8		Total	1,097.2	1,056.8

Pension provision increased y-o-y due to lower interest rates; however down q-o-q

Pension provision, in EUR million

Payments for CapEx partly financed by customer prepayments

Cash flow, in EUR million

	Q1/ 2017	Q4/ 2016	Q1/ 2016
Cash flow from operating activities	48.7	28.7	26.8
thereof repayment of prepayments	-5.1	-5.9	-5.0
thereof new customer prepayments	5.5	0	0
Payments for CapEx	-17.4	-18.7	-33.5
Free cash flow	31.3	10.0	-6.7

Comments

• CapEx for investments in:
• − state-of-the-art crystal pullers and further automation of production sites
• − product mix optimization (leadingedge products)
• CapEx for 2017 will be around EUR 100m; partly financed by USD 20m customer prepayments
• Strong net profit lead to high free cash flow of EUR 31.3m in Q1

Contact and Additional Information

Issuer and Contact Siltronic AG Hanns-Seidel-Platz 4 D-81737 München Investor Relations: Petra Mueller email: petra.mueller@siltronic.com Tel. +49 89 8564-3133 Additional Information ISIN: DE000WAF3001 WKN: WAF300 Deutsche Börse: WAF Listing: Frankfurt Stock Exchange Prime Standard Financial Calendar Annual General Meeting May 9, 2017 Q2 2017 Results July 28, 2017 Q3 2017 Results October 26, 2017

Disclaimer

The information contained in this presentation is for background purposes only and is subject to amendment, revision and updating. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, as well as the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar expressions identify forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These include, among other factors, changing business or other market conditions and the prospects for growth anticipated by Siltronic AG's management. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Siltronic AG does not undertake any obligation to update or revise any statements contained in this presentation, whether as a result of new information, future events or otherwise. In particular, you should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation.

SILTRONIC AG | Hanns-Seidel-Platz 4

81737 München Deutschland